Will Your Small Business Fail?

According to the U.S. Small Business Association, over 50% of small businesses fail in the first year and 95% fail within the first five years! And, according to Dun & Bradstreet, only 10% of these close involuntarily due to bankruptcy. The remaining 90% closed because the business was not successful, did not provide the desired level of income, or was just too weak to continue. SHOCKING STATISTICS! What about your business? Will it make it?

Further, according to Dun & Bradstreet, 88% + of all business failures are due to management mistakes, many of which could have been avoided.

The following is a list of the twelve broad causes that lead to business failure:

  • Lack of Industry Experience
  • Inadequate Financing
  • Lack of Adequate Cash Flow
  • Poor Business Planning
  • Management Incompetence
  • Ignoring Competition
  • Unworkable Goals
  • Diminished Customer Base
  • Uncontrolled Growth
  • Inappropriate Location
  • Poor System of Control
  • Lack of Entrepreneurial Skill


In working with clients, I often told them they “need to spend more time working on their business than working in the business”. A common statement, but, what does it really mean?


Successful business people continually analyze their operation seeking weaknesses and skill gaps that need to be addressed. The twelve causes listed above provide a great check list to use when assessing the strengths and weaknesses of their business.

They also point out the importance of having an experienced advisory team to help in this analysis. All of us as successful business people have certain skills. But, we do not possess all of the skills needed to insure the long term success of a business.

One of the key roles of the business entrepreneur is to build a team of advisors who can help him see opportunities and obstacles form all perspectives. This team is commonly made up of CPAs, Lawyers, Business Advisors and other successful business leaders.

To avoid becoming one of the 95% whose business does not make it, be honest with yourself. Do you have all the skills needed to run a business and grow it? If not, where do you need help?

Get you team in place. Ask for help. And, avoid the management pitfalls that lead most companies to failure.


By: BizBlog Advisor, Chuck Thompson